The Laclede Group: A Strong Buy

The Laclede Group reported its financial results for the first quarter of fiscal 2013 (ended December 31, 2012) on Feb 5, 2013. The company’s results were impressive with earnings per share coming in at $1.25, up compared with $1.11 in the year-ago quarter and 14.7% above the Zacks Consensus Estimate of $1.09.

Total operating revenue in the quarter fell 25.3% year over year, due primarily to a 65.2% fall in Gas Marketing revenue and a flat Gas Utility revenue performance. Despite the poor revenue performance, a fall of 28% in operating expenses kept the momentum strong for The Laclede Group. Operating margin came in at 13.7% as against 10.5% in the year-ago quarter.

Acquisitions, over time, have been The Laclede Group's one of the favored mode for expansion. In the first quarter of fiscal 2013, the company finalized the acquisitions of Missouri Gas Energy and New England Gas Company from Southern Union Company. The completion is expected before the fiscal year 2013 closes.

Solid quarter results as well as positive earnings surprise in three out of four trailing quarters, with an average of 37.2%, have raised optimism for better financial results for The Laclede Group. We have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +3.5% for fiscal 2013 and 3.6% for fiscal 2014.

In the last 60 days, the Zacks Consensus Estimate for The Laclede Group increased by 2.5% to $2.86 for 2013 while that for 2014 the estimate went up 6.0% to $3.02.

Other Stocks to Consider

Other stocks to watch out for in the industry are Atmos Energy Corporation (ATO), Chesapeake Utilities Corporation (CPK) and Sempra Energy (SRE), each holding a Zacks Rank #2 (Buy).